NZX to target agricultural firms

Head of exchange says firms in under-represented sector are being visited to explain benefits of listing.

Fonterra also made its sharemarket debut last year with the listing of the Fonterra Shareholders' Fund (FSF), which gives investors access to the dairy co-op's dividend flow. Photo / Mark Mitchell

Boosting the number of listed agricultural firms is one of the NZX's main priorities and there are about 20 firms in the Waikato alone that could potentially float on the local bourse, says exchange chief executive Tim Bennett.

While agriculture is New Zealand's largest sector, earning about half the country's export income, it is under-represented on the sharemarket compared with other industries such as retail and manufacturing.

Bennett said he saw the lack of listed agricultural companies as a problem and an opportunity.

"As a country that's got a significant export presence in agriculture, we clearly need to provide capital to that sector and at the moment there's a relatively small number of companies involved in the agricultural sector on the NZX," Bennett said.

There is a group of listed firms with strong links to the sector, including rural services provider PGG Wrightson, Skellerup, which manufactures milking equipment and other rubber goods, alternative milk company A2 Milk and Port of Tauranga, through which a big chunk of the country's agricultural exports are shipped.

Fonterra also made its sharemarket debut last year with the listing of the Fonterra Shareholders' Fund (FSF), which gives investors access to the dairy co-op's dividend flow.

Bennett said the current market environment - in which recent offers, such as craft beer maker Moa and the Mad Butcher, have been heavily oversubscribed - was attractive to firms looking to float and the NZX was investing time and effort into visiting agricultural companies and explaining the benefits of listing.

Many firms operating in the agricultural space were successful, privately owned businesses that had never considered listing, he said.

Bennett hoped there would be stronger agricultural representation on the exchange in five years' time.

Many businesses in the sector operate under a co-operative structure and it was a medium- to long-term objective to see more co-ops come to market in a similar fashion to Fonterra, Bennett added.

Mark Lister, head of private wealth management at Craigs Investment Partners, said a lack of investment opportunities in the agricultural industry remained a source of frustration for investors, despite the addition of the Fonterra Shareholders' Fund to the market.

Having the fund listed on the NZX was a big step forward, Lister said. "But owning a Fonterra Shareholders' Fund unit is not the same as owning a dairy farm or part of a dairy farm."

Everyday investors, however, may soon have the ability to invest directly in dairy farms.

MyFarm, a firm that organises syndicates of high net-worth individuals who purchase farms, is planning to launch an offer on the Unlisted trading platform this year. The Feilding-based firm said MyFarm Trading would allow any investor to buy an interest in a syndicate.